The company acquired a low-cost product line in Taiwan and planned to market the line through U.S. and international distributors.
The product line had more than 300 parts, and lead time to get products out of Taiwan was four months. The company didn't have the capability or the cash to forecast 300 parts accurately over a four-month period and couldn't afford to stock the shelves hoping it had the right mix. Barlow and Billock soon realized WRC didn't have the same marketing clout as bigger companies, and the founders took a leap of faith and moved their production facility to Akron.
This created new challenges -- such as organizing a plant, finding and training employees, and developing processes to manufacture a quality product -- but it didn't cost any more money. Wages were higher in Akron, but WRC eliminated a layer of margin built in by the Taiwanese contractor, as well as expensive freight and duty fees.
Nine years later, Barlow and Billock changed their business model again. They conducted a ruthlessly honest assessment of the company and found their strengths were engineering and manufacturing and their weakness was marketing.
In response to the assessment, they developed WRCoutsource, a plan to offer WRC's engineering and manufacturing talents as a package to organizations that either were understaffed or that had no electronic staff. This allowed it to approach a more focused set of customers.
As a result, WRCoutsource has grown from 0 percent of the company's sales in 2000 to 60 percent of sales in 2004, with 2005 expected to be another banner year.
Akron Mayor Donald L. Plusquellic proclaimed Jan. 5, 2000, as Western Reserve Controls Day and recognized the "unique public-private partnership in forming WRC into a leading manufacturer of industrial controls and in recognition of the growth of the company." Today, WRC's 11,000-square-foot factory markets it products across the United States and in 20 countries.
HOW TO REACH: Western Reserve Controls Inc., (330) 733-6662 or www.wrcakron.com
The following year, President and CEO Dee Vaidya tried to get subcontractor work from a division of Johnson Controls, a federal contractor based in Fort Collins, Colo. But Johnson Controls had begun letting people go from that division and was considering selling it or shutting it down by year's end.
"So we said, 'Hey, we might be interested,'" Vaidya says. "We talked to Johnson Controls, and by September 1994, we were the proud owners of this tiny little division."
Techni Graphic Systems also inherited federal work from the Defense Mapping Agency, a support division of the Department of Defense, and the U.S. Geological Survey. Then in 1997 the government changed its contracting style -- rather than deal with 200 or 300 companies of all sizes, it would work with a few large companies, and other companies would serve as subcontractors.
"During that five-year omnibus phase, we were not really federal contractors of the Defense Department, we were a subcontractor for the Defense work through one of the satellite companies," Vaidya says.
Two years ago, the Defense Department relet that contract, and Techni Graphic Systems, which had revenue of $2.54 million in 1999, won a 10-year, $200-million contract with the National Geospatial-Intelligence Agency (NGA).
Today, the Fort Collins operation has grown from 10 employees to about 65, and space is tight at its 10,000-square-foot Wooster facility, where its employee numbers are expected to grow from 70 to between 200 and 300. With state and city grants, the company is building a 25,000-square-foot facility in Wooster and is planning a spring 2005 move-in.
"We're financing our own land and building, but the city is putting in the roads, sewers, storm sewers and lighting," Vaidya says.
The company is also diversifying its commercial software with PinPointer, which maps businesses; MxVision, which tracks nursing home information; and PlotFinder, which helps cemetery managers track sales of the real estate parcels. The federal Department of Homeland Security also uses Techni Graphic Systems' technology to study U.S. "entities of critical infrastructure." HOW TO REACH: Techni Graphic Systems Inc., (330) 263-6222 or www.tgstech.com
And yes, they are twins. So what is it like running the company with a relative?
"I think being (in business with) a relative is different than being (in business with) a twin," Thompson says. "We are so close, and we both can't imagine being in business with anybody else."
Thompson began her career as a teacher and used music to teach basic skills to her first-graders. When she began teaching third grade, she and Hilderbrand wrote "Rap With The Facts" to teach multiplication, and parents and students loved it. They researched the school supply market and launched Twin Sisters with one product.
Thompson left teaching and Hilderbrand left her industrial engineering job to grow the company full-time. Today, Hilderbrand spearheads operations, Thompson handles product development, and they both work with their sales team. The 18-year-old company now offers CDs of lullabies, religious music, foreign language instruction, social studies, science, math and its newest products, Musical Play in the Box and Speechercise, "a musical workout for your mouth."
Twin Sisters' sales, marketing, administration and product development office is in Akron, with its distribution center in Cuyahoga Falls. The company owns the copyrights to all of its music, most of which is recorded in Nashville (some is recorded in Canton), using children singers and professional musicians. This is quite a change from the early days, when the duo provided the vocal talent.
Smart Business sat down with with Thompson and Hilderbrand to discuss their company's role in the children's music industry.
In 2000, Twin Sisters was sold to Cinar Corp. In 2003, you bought it back. Why did you sell, why did you buy it back and what changes have you made?
Thompson: We (sold it) because we thought it would be great to be working on some TV, film and PBS programs. ... Over the years, (Cinar) ran into some troubles, and they needed to sell off all the different companies they had purchased. So we had the opportunity to buy our company back, and we did that.
Hilderbrand: During those years when they owned it,... we ran it the same way ...
Thompson: ... That we do now. The only change is that ... they had distribution in North Carolina. We had all of our functions right here -- the sales part, development, administrative -- and they had the warehousing facilities.
Our company does music for children but our slant is ... that our music has a teaching element in it. ... Children can listen to the radio and memorize words by hearing something maybe one time, and so it's just a really good teaching tool to help children, and it's a good motivator. They get excited because they can sing and dance and learn at the same time.
In addition to independent religious, educational and children's stores, your products are sold at Borders, Wal-Mart, USA Baby, Toys "R" Us, Babies "R" Us, Berean Christian Stores and Holcomb's. How did you attain these corporate partnerships?
Thompson: We went to trade shows that sell to school supply stores and catalogs, and, in turn, those stores sell to teachers. We really started with the teacher market and have branched off from there in other specialty retailers.
Hilderbrand: We have national sales managers that work for us, and they go out and call on these accounts directly. We call on buyers.
Thompson: Karen and I go on the larger sales calls with the national sales managers, and we've established relationships over the 18 years we've been in business.
Hilderbrand: It just has to do with having the right product and being able to participate on the same kind of terms they need. You have to be able to ship on time, produce the product and be able to handle the distribution the way they want it. If you can do all that, then it's no problem.
Twin Sisters has won more than 120 major national product awards. How do you stay on top of trends in the children's music industry?
Hilderbrand: We go to all of the trade shows for our industry, we shop, we have kids of our own, we stay up on the research. ... A lot of the record competition copies us as well, so we just try to stay on top of what's coming forward.
Thompson: We go to Toy Fair in New York; we go to educational trade shows called NSSEA.
Thompson and Hilderbrand (at the same time): The National School Supply and Equipment Association.
Hilderbrand: We go to CBA (the Christian Booksellers Association), we go to NARM (the National Association of Recording Merchandisers) and Book Expo, which is the big book show in Chicago. We'll go to the baby shows and the JPMA (Juvenile Products Manufacturers Association).
Thompson: We also meet with teachers and have focus groups. If we have a product idea, we'll bring teachers in and get their opinion on what is missing and what we need to add. We want to make sure we have age-appropriate products and the right skill level on those products.
Our own kids are great because (they) are very honest with (us.) Sometimes I'll just play it in my car and see the reaction, or they'll say, 'Oh Mom, play that again.'
Hilderbrand: We're focusing on doing more book product with music in the future because we feel books are here to stay, and there's a lot of creative book product coming out now.
Thompson: (These are) activity books and workbooks ... to incorporate learning along with the CD. We're also looking at other trends in the music industry that are changing.
Hilderbrand: Like Latin products, that's the newest trend.
What are the keys to your success?
Thompson: You have to find a niche. Find something that can really meet a need. That's why we have been successful because we have really stuck to our niche in educating children with music. It's fun and it's motivating, yet it is a proven method that really works.
Kids get excited, and that's what you want. If your child has to learn something, make it as fun and as exciting as possible.
Hilderbrand: It helps to really like what you do every day because then you don't have the typical burnout problems. We still really like what we do, so that makes it fun. I think our staff feels the same way.
They love when the sales (managers) sell (our products) because they can go to the stores and say, 'I worked on that.' HOW TO REACH: Twin Sisters Productions LLC, (800) 248-8946, www.twinsisters.com
Sky acquired Metropolitan Bank and Trust Co. in mid-May 2003, Great Lakes Bank in December 2003, and in July 2004 finalized its acquisition of Second National Bank.
"When we created the Cleveland region, the challenge I had was forming a new team, trying to accelerate that team's adoption of all of the best practices of Sky and executing in a highly competitive marketplace," Hollington says. "I felt a need to do more than just what the company had done to that point. I felt the need to accelerate the performance of my region and, in doing that, to invest in the individuals on my team to help them perform more quickly, more effectively."
Hollington had heard Donna Rae Smith, founder and CEO of Chagrin Falls-based Bright Side, speak at a Florida business conference and was impressed with her methods for transforming individuals and team leaders through development workshops and sustainable programs.
"There are so many things that you do that seem like a great thing the day that you do them, but the next day, nothing happens," he says. "(The Bright Side process is) not just a one-time event; it's actually going to be something that's going to change the way we work, the way we behave and the way we perform."
Hollington spent several months talking with Smith about the Bright Side process and consulting with other corporate executives who have been through the process. He also took the concept to Sky Chairman, President & CEO Marty Adams, who gave his approval but insisted that the process align with Sky's current development programs because "we don't want to start a new path, we want to perform better on the path we're on," Hollington says.
" ... The (Sky) corporation has invested a lot in the programs that we have, and my intent was not to reinvent the corporate programs. It was to introduce something to my team that would accelerate our adoption of those programs and become the best at utilizing sales and service culture."
The Bright Side methodology was appealing to Hollington because of Sky's vision for how it wants to compete in the market.
"We need to win the hearts and minds of our clients because we compete on a relationship basis, not on a price basis," he says. " ... We want to deliver more value than just the bank transaction that's in front of them, in the form of advice, counsel and problem-solving."
Smith says CEOs must be committed to the hard work that is required for sustainability.
"That's what impressed me most about Dick in my first meeting with him and continuing to work with him, is what a learner he is and how open to learning he is and how transparent that is with the rest of the team and the rest of the organization," she says. "It's really hard work for an executive to lead change, to coach change, to model change, to be learning and leading at the same time."
Following the Bright Side process, Hollington and his team are undergoing six phases to transformational, personal and team leader development. It started with a discovery assessment phase, which included interviewing the workshop participants and the stakeholders -- the Sky board and executives from other Sky regions and its corporate office.
The Bright Side staff customized a four-day experiential, interactive workshop, and when participants left the workshop, each had a learning partner, a personal leader development goal and plan and an application strategy to apply the learning in the work environment.
Six weeks later, the group returned for team reinforcements, individual coaching and learning partner coaching.
"We incorporate behavior change measurement and outcome change measurement through various measurement and assessment tools that we have," Smith says. "And that incorporates, most importantly, how people are observably behaving differently. That is creating execution. That is creating different results, better results."
Hollington says his team has come to the realization that it's hard work to think about and change your behavior in this way, but he expects performance improvement immediately as a result.
"In my view, there's application for this process in other parts of Sky, other regions, other parts of the corporation, any part of the organization where we have leaders trying to meet teams and solve problems and move forward," he says. "As a company, we're looking at the impact and results that we're getting from our efforts here in Cleveland to say, 'Where would be the next logical place to do this, and has it been effective?"
Smith says she observed the transformation when she attended two meetings led by Hollington one week apart.
"First, the energy in the (second) meeting was noticeably different because there was a commitment to clarity around each person's behavior and the impact that it had on specific goals and outcomes," she says. "Dick is leading that effort, and I noticed how he has set the stage for the rest of the team to similarly be clear on their commitments and their outcomes.
"That creates a different kind of energy, an engagement, an excitement in the meeting. This is execution versus telling."
Hollington says he's learned that his perception of his role in the company and his team members' perception of his role are two different things.
"I think my team very much wants me to play a heavy facilitation role as I interact with them and less of a command-and-control telling role," he says. "Now that I'm aware of that, the way I operate within our meetings is much more to facilitate discussion and to draw out ideas from the team, rather than share my ideas with the team. And, if you knew me very well, you'd know that would be hard to do because I have a lot of ideas I want to share.
"If I weren't aware of that, I'd just keep throwing ideas on the table, none of which would resonate and none of which anybody would do because they'd be sitting there thinking, 'If he knows what he wants me to do, why doesn't he just tell me and we'll do it?'"
The new methodology allows Hollington's team members to develop a set of ideas that excites them and energizes them to develop a plan to execute it. The end result will be as good or much better because the team will want to make the ideas come to fruition.
Hollington says every experience a client has with Sky is the most important one, and he needs to ensure that every time a client interacts with Sky, it's a positive experience.
"It just takes that last bad one to be the one that ends the relationship, and all of the 200 good ones that came before it disappear. So you have to ensure that everybody understands," he says.
Smith says the sustainable advantage that any company can have today is in-the-moment learning and applying the action from learning.
"I have come across one wonderful quote about learning, 'The illiterate of the 21st century won't be people who can't read and write; rather it will be people who can't learn, who don't have the capacity, the capability to unlearn and relearn,'" she says. "Learning really is the sustainable advantage with the action that Dick is driving for the Sky organization, and doing it very well." HOW TO REACH: Bright Side, (440) 543-1800 or www.bright-side.com; Sky Bank, (216) 206-6000, www.skyfi.com
Keys to success
Dick Hollington is leading Sky Bank's Greater Cleveland Region and using a transformational method created by Donna Rae Smith for her company, Bright Side, to accelerate that process.
They sat down with Smart Business to discuss what a company needs for a strong corporate culture.
* Culture is established at the local level. There are 30 financial centers in Hollington's region, and each has its own culture.
"What is important to me is that the key elements and the vision are being lived every day in and day out," he says. "Every manager I have is a little bit different in the way they manage and the way they interact. ... They're creating a little bit different culture in their office because of the difference in their style and the interaction of the team."
* Individuals' beliefs, values and behaviors affect culture. Decision-makers should encourage employees to be uniquely different and authentic, as well as to follow a transformational methodology to be No. 1.
"For any organization to have accelerated change, it is important that each individual within that organization has the belief and emotions that will drive the behavior for accelerated change," Smith says.
* Form your team. "If the quarterback is the only guy who knows how to keep score and you have 11 other players, how are you going to win the game?" Hollington says. "You need everybody to understand the rules of the game and what you're trying to accomplish to get there. ... You can't win unless you've got everybody on the team playing toward that goal."
Within the building is the office of Susan Hamo, president of the Knight Center and of the Akron-Summit Convention & Visitors Bureau. Pittsburgh-born Hamo moved to Akron when she got married 36 years ago.
"I'm starting to finally call myself a native," she jokes.
She began her career at the visitors bureau 20 years ago as a sales manager, encouraging trade associations and corporate meeting planners to bring their conventions to the Greater Akron area, and she became its president in 1993. When the John S. Knight Center and bureau consolidated their locations in 1995, she became president of the Knight Center as well.
Celebrating the center's 10th anniversary last month, Hamo says the bureau and the center are "a great place to be and to work. People like to be here and like to work here, so they like their job, and they do a good job. That's the whole domino effect. ... I love living here, so why wouldn't I love telling other people why they would love at least visiting here?"
Smart Business sat down with Hamo to discuss tourism and economic development in Akron.
How has promoting Akron changed in the last five years?
We've had such wonderful development in the whole area that the product we now promote -- the Greater Akron area -- is just an easier sell. We have more amenities to offer guests and visitors. We have Canal Park, the Inventors Hall of Fame and the John S. Knight Center; Lock 3 is a wonderful addition to the landscape downtown.
Akron is a hard first-time sell to someone who's never been here, but our repeat business is exceptionally high. ... (We host) familiarization tours of the area with clients -- corporate and association meeting planners, the true meeting planner who's going to decide where an event will be held -- because once they see everything we have to offer, the sell is so much easier. ... Of course, there's no cost to the client; this trip is on us, to let them see what we have.
We're seeing (clients from) Pennsylvania and New York, although probably 75 percent of our association business comes from Ohio. We see much more of the leisure travel and bus groups coming from the contiguous states.
How does promoting Akron locally differ from promoting Akron regionally?
Locally, we try to encourage the citizens of the area to take advantage of what's in their own backyard, through TV spots and media buys. Bureau personnel will speak to any group that asks us, just to let them know we're here and what we do.
During those speeches, we always say, 'How many of you have ever been to Stan Hywet, to the Soap Box Derby, to any of these other wonderful attractions we have?' And you'd be surprised how few hands go up. ... So our job locally is to educate the people on what they have in their own backyard and encourage them to be a tourist in their own hometown.
Our needs outside are more client-based: What does the client need, and how can we fill those needs? ... Regionally, statewide and nationally, we're in industry publications, resource manuals, the National Tour Association manual and the American Bus Association manual. We're in the national publications used for resources, as well as national publications and newspapers.
About two years ago, we did a buy with the Chicago Tribune -- not very large, obviously -- promoting day trips. We had a wonderful response because it's a nice, close inexpensive trip for these folks. We really carefully weigh our budgeting and advertising dollars. ... To be honest with you, we did that pre-9/11. Obviously, our dollars tightened up post-9/11. As we see that slow increase and the increase to normalcy in the tourism industry, I think we'll look at that again.
We're very fortunate here. We've found that being a third-tier city -- where the majority of our guests don't fly, they drive -- we were affected (by Sept. 11) probably as little as anyone. We were almost a safe harbor for some people. ... They could still have their annual meeting or association meetings with us and drive.
They were probably as comfortable coming here as they were anywhere. I don't want to ever sound like it was good for us, but the reality of it is, business was affected minimally here.
In the last year, we've seen a steady increase, where we're just starting to return to normal, to pre-9/11, (due to) the economy, the comfort level of people and increased security measures. We're seeing a big increase in the number of bus groups because historically, the people in bus groups are a little older.
These people are taking trips on their savings and their portfolio money; after 9/11, they weren't going to do that anymore because they didn't know how the economy was going to be or how long their money would have to last. Now that they're seeing positive signs in the recovery nationally, they're not afraid to spend some of that.
What plans lie ahead for the bureau and the center?
(The bureau staff continues to) sell the area as the ideal destination for conventions, associations, tours and leisure travel. We're very pleased with the results; every year, business increases. We represent Akron and Summit County, and we're seeing these communities develop more destinations as part of the county.
Business is good at the Knight Center. The city commissioned a study with Peat Marwick pre-building to determine the feasibility of the need. I'm happy to tell you today we are exactly where we should be, based on the 10-year projections of that study, (looking at) the number of conventions, meetings, people through the doors and certainly the budget.
The biggest problem we have is not unique to the Knight Center. It's a problem nationwide with convention centers: the illusion of being busy. If local people don't see lines of people outside a center waiting to get in, they assume we're not busy, when 80 percent of our business is private: FirstEnergy and Diebold meetings, state association meetings, corporate meetings and videoconferencing, where you wouldn't see people waiting in line to get in. ... It's all perception, but it is still something that is a concern to us.
We want people to know that, yes, indeed, we are busy, even though you don't see 1,000 people in line to get in. ... That's why it's important to know that we are right on target based on the projections of the study.
What role does the local business climate play in promoting Akron?
(It's) absolutely pivotal to our success here at the Knight Center. The local businesses and corporations knew we needed a convention center; they lobbied for it and are now the major users of the facility for meetings and conventions. ... It says a lot to me about the morality of our business community. I think that's important. ...
We are the envy of (cities statewide) because our local politicians understand the value of this partnership and understand that the Knight Center and the Convention Bureau are part of their economic development. How to reach: Akron/Summit Convention & Visitors Bureau and the John S. Knight Center, (800) 245-4254 or www.johnsknightcenter.org
Moving to bigger projects, such as mowing lawns and plowing snow while in junior high, and buying, fixing and renting houses during high school, helped him develop his sales and people skills.
At age 24, he bought MC Sign, a two-person sign service and neon company in the Ashtabula area that was doing annual sales of less than $100,000. Nearly a decade later, at year-end 2003, MC Sign exceeded $25 million in annual sales, a feat Eippert says he accomplished by "putting a good team of people around me ... people who are smarter, brighter and more knowledgeable in areas than I am.
"We've got an awesome group of talent that is very knowledgeable in their key areas of the business, and we quite frankly just let them run that area of business," Eippert says. "We provide the vision, the support and the strategy, and let them handle the tactical vision of their area."
The sign business is a "pretty easy product to build," he says, but the hard part is putting the quality service around the product. Eippert and his team name better communication and project management services as a priority and work diligently to make MC Sign a one-stop shop where customers know their sign project will be handled by a competent team.
This, he says, is imperative for MC Sign's national accounts, where consistency creates a successful image and brand.
Eippert says the company expects continued growth of 20 percent annually and yearly sales of $35 million to $40 million in the next five years. How to reach: MC Sign Co., (440) 953-2280 or www.mcsign.com
Central Cadillac-Hummer recently underwent a $4.5-million renovation and expansion. The dealership was last renovated in 1970, and Porter, president and third-generation owner, says it was time for a new look.
"We had reached that point again in our history where the building looked good -- we spent a lot of time maintaining it -- and it felt good, but it was starting to be a little dated," he says.
Porter had just signed papers with Cadillac to redesign the facility in the late '90s when the parent company reinvented its image.
"If you don't change with times and with your customers, you're speeding backwards," Porter says. " ... We're trending to younger buyers (who are different) than our traditional buyer. They are more demanding and have busier schedules, and we have to adapt to their needs if we're going to grow and expand."
Central Cadillac-Hummer is the first dealership in Northern Ohio and the 20th in the country to embrace Cadillac's new design. The project is being financed by several sources: Cadillac is paying for a portion, General Motors gave Porter a seven-year interest-free loan and Porter's landlord -- The Cleveland Foundation -- is paying for part of the project.
"My father's estate, about 95 percent of it, was given to The Cleveland Foundation, and that included the building and the property that Central Cadillac sits in," he says.
Osborn Architects-Engineers performed initial engineering work, and Nashville-based Infrastructure designed a package that included the Cadillac concept, furniture, finishes, floors, wall coverings and ceilings. City Architecture converted the concept to meet city codes, designed the drawings and worked with Marous Brothers Construction to create an efficient design.
"(The renovated dealership is) very contemporary in its design. ... It says, 'Cadillac's doing business differently. Cadillac is re-energized.' ... The limestone exterior, special window treatment, butt-glazed windows, unique tile floor - these are things you won't see in another automobile dealership," Porter says.
Porter worked closely with his Continuous Improvement Team (CIT Team) to discuss important facility changes.
"Typically in an automobile dealership ... everyone came to the dealer and said, 'How do we fix this problem?' That isn't the most effective way of solving problems," he says. "The dealer often is the guy in the organization who is furthest away from the problem and probably isn't going to come up with the best ideas."
His CIT Team took on problems, came up with ideas, presented them to managers and brainstormed a game plan.
"The employees come up with some great ideas," Porter says. "We have around 100 employees, and if we can release the talents of 100 employees, it's a whole lot more effective than one person."
The redesign moved the sales offices to the first floor -- closer to customers -- and the general office to the second floor. A customer waiting area was added, with a boutique that sells Cadillac and Hummer merchandise. Porter and his team also switched locations of the dealership's used car lot on Prospect and employee parking on Carnegie because the Carnegie lot features higher visibility.
Although the project tore his father and grandfather's original building down to the steel joists, which "would have sent them right over the edge," Porter thinks they would be "overjoyed with what it looks like today."
Best laid plans
Frank Porter Jr. has gained new insight on the real estate industry since his dealership began its $4.5 million renovation eight months ago. Days before Central Cadillac-Hummer's May grand reopening, Porter shared tips for planning a successful remodel.
* Factor extra expenses into the budget. Porter says the dealership's renovation and expansion project was expected to cost $3 million but unforeseen technical problems arose because ...
* Even well-built and well-maintained older buildings may not accommodate new technology. Porter didn't expect to abandon his building's plumbing system until contractors began cutting into the pipes.
"It looked like someone's arteries, lying on the table at the Cleveland Clinic having heart surgery," he says. "It was an old cast-iron pipe, and it was about two-thirds blocked." The dealership's water distribution lines were replaced with new copper pipes, and aging electrical systems were exchanged with new breaker boxes and service.
* Brainstorming sessions with employees and architects can lead to better facility plans. Originally, Central Cadillac-Hummer's service advisers wrote up customer orders at podiums on the service drive, where it was noisy from nearby repair work, hot in the summer and cold in the winter. The remodeled dealership includes five new offices for service advisers, where customers can sit in a comfortable environment to discuss their needs.
* Consider the customer. Porter says his dealership is centrally-located, and most of his customers pass another Cadillac dealer to do business with him.
"We've got to continue to improve the customer experience," he says. "We have to be on the cutting edge to continue to attract our existing customers and new Cadillac owners."
He is road-tripping to Eastern Pennsylvania to oversee the final steps before a store's grand opening. "I'd better get out there and make sure everything's done," he says, his cell phone crackling.
This accountant-turned-pretzel-maker's attention to detail -- a credit to his early days at Ernst & Young in Cleveland -- and his passion for his product have won the company spots in Entrepreneur magazine's Top 500 Franchises and Franchise Times' Fast 55. Since January 2002, it has more than quadrupled in size and its goal for 2004 is to have 100 stores open or under contract.
In addition to pretzels, We're Rolling Pretzel Co. offers pizza pretzels and knot sandwiches as meal items, and unlike the competition's large venue locations, its stores are located in smaller cities with little, if any, direct competition.
Shortly after this interview with Krabill, Cedar Fair offered to buy Six Flags in Sandusky, where We're Rolling Pretzel Co. had one store on the ride side and one on the animal side, which Cedar Fair did not plan to reopen. At press time, Krabill hoped to move the animal-side store to the ride side and was awaiting word from the park.
"(The purchase by Cedar Fair) will be good for the park long-term," Krabill says. "Six Flags had a lot of debt, and Cedar Fair is a good operator."
We're Rolling Pretzel Co. maintains 30 locations in five states, including stores in Wal-Mart Supercenters, is building eight stores and is pursuing college campus and turnpike locations.
Smart Business spoke with Krabill, president and founder of We're Rolling Pretzel Co., about franchising and the Wal-Mart relationship.
What makes a good franchisee?
We send out an initial interest package with a personal profile form. It's a high-level questionnaire where we get information about their financial background. We ask why they want to buy this business and who's going to be in charge of day-to-day operations. Once we get that back, we pull a credit report to filter out people who have past payment issues. Then we meet the prospect at an existing store and give them a tour, and we sit down to talk about why they'd like to do this.
I equate franchising with getting married. You don't make the sale and then walk away; they're with us for a minimum of five years. What we're trying to do is understand their philosophy and personality. Are they a good fit? Do they want to be part of the team? Can they follow the system? I think they're doing the same thing to us.
We've developed a system that is almost 8 years old, and we have a high level of documentation on how to run one of these businesses, from what to do when you open, how you talk to customers, what the product should look like, how to do inventory and keep accounting records. We're looking for somebody willing to follow that system, even if they may not agree with it in the beginning. The people who are most successful follow that system to the T. People who want to go out and be the Lone Ranger tend to fail, sell to somebody else or are not as happy.
It is a learning process because our system continues to evolve. Periodically, we get people who say, 'Why don't we do this instead of the way we're doing it today?' We try to be open to that because they come up with some really good ideas. But at the same time, if we decide this isn't going to work, they have to be willing to accept that. That's hard for some people to do.
How did you secure your company's relationship with Wal-Mart?
A local developer once said to me, 'How many stores do you have?' and I said, 'Two,' and he said, 'When you have 100, call me back -- CLICK!'
That was my impetus. I said, 'We have something here that I think is very different, one that many mall developers have overlooked.' They had Auntie Anne's and Hot Sam, and they didn't want to look at what we were doing different.
So I said, 'Who else is out there that we could talk to?' And I thought, 'Wal-Mart is a good opportunity.' I didn't even know if 1-800-WAL-MART was the right phone number; I just picked up the phone and called. A receptionist answered. I told her what I wanted, and I left a short voice mail message.
A lady in Bentonville, Ark., called me back 45 minutes later, and we talked for about an hour. At the end of the phone call, she said, 'How would you like to come down and pay us a visit and make a presentation?' So she picked a date, and I said, 'Sure, I'll be happy to be there.' I hung up the phone and thought, 'Oh my gosh, I have nine days to prepare.'
I immediately called my franchise attorney friend and another friend who was a graphic designer, and we put together this short but nice presentation. I flew to Bentonville and made the presentation to seven people who manage real estate for the entire country. They asked lots of questions ... and at the end of the meeting, the lady who invited me said, 'Kevin, we'd like to give you five stores as a test.'
It was pretty heavy stuff, and we've just grown from there.
Everybody is always talking about Wal-Mart being so hard to deal with but they've been incredibly helpful. They do business with some of our competitors, and I've often heard from some Wal-Mart people that they like us better -- and we're much smaller than some of our competitors.
The one thing we've always done -- even if it means we work a 24-hour shift to get a store open -- we have never missed a grand opening. ... We made them a promise to deliver what they need. The penalties for not delivering are pretty severe. If you miss a grand opening by an hour, it's a $5,000 penalty and, more importantly, (Wal-Mart says,) 'We should reconsider whether we should be doing business with you or not.' In the beginning, that's somewhat daunting. ... It's a landlord-tenant kind of relationship; those are all individual franchisee deals, where Wal-Mart is our landlord.
The company has received a lot of recognition lately. How do you plan to keep up this momentum?
We support our existing franchisees to the absolute highest level possible. That is priority No. 1, always. ... Most franchises sell equipment to their franchisees and make money; we do not. Most people sell product to their franchisees and make money; we do not. There's all kinds of ways to make money in this business that are somewhat hidden to the franchisee. They learn, sooner or later, and then they're not very happy about it.
We are very up front that we get a 5 percent royalty and a 1 percent advertising royalty, which goes into the company's advertising fund, and other than that, we don't make any money from the stores. It's a combination of communication and treating them fairly.
We try to do as many deals as we can with existing franchisees who want to buy more stores. By working with current franchisees, we have a proven commodity, so when they buy a second store, they know what they're going to get, and we know what we're going to get.
We're in the early stages of preparing a program where we would sell an entire state to somebody who would become an area developer. Their responsibility is to provide support, get the stores open and do the training. We would do those deals in states that are farther away. It's not really practical for us to go to Florida.
But if we find the right person to be the area developer, I'd train and support them properly, and they would be able to do that in those farther-away states. ... Franchisees who own other businesses are looking at our track record and the opportunities, and they're saying, 'I can do that.' How to reach: We're Rolling Pretzel Co., (888) 549-7655 or www.wererolling.com
Eighteen years ago, 14-year-old Todd Pugh bought his first lawn mower and got his first customer. Today, Todd's Enviroscapes Inc. has become a $3 million-plus design-build and landscape management company with more than 60 peak-season employees.
The company, which Pugh ran with his brother throughout their college careers at The Ohio State University, expanded from mowing and small landscape projects to creative landscape solutions. Enviroscapes soon outgrew its space on Pugh's father's farm, and they purchased a 27-acre lot to accommodate expansion.
To increase sales and broaden their client base, Pugh bought Sunshine Landscaping in 2000. A year later, the company built a 14,000-square-foot landscape, maintenance and garden center facility, and as of press time, Pugh was expecting $3.45 million in revenue to complete Enviroscape's fiscal year 2003.
"We are always looking for ways to mechanize to reduce labor and increase production," Pugh says. " ... The most effective tool we have is the Mulch Mule ... a joint venture (75 percent Enviroscapes and 25 percent Hoppel Fabrication). ... The conventional method to install mulch would be one yard of mulch per man-hour, but with the Mulch Mule, you can do three yards of mulch per man-hour."
Three years ago, Pugh founded Green Industry Innovators to manufacture and market the machines. The Mule recently was named to Landscape Management Magazine's Top Ten Labor Saving and Profit Making Tools of 2003. How to reach: Todd's Enviroscapes Inc., (330) 875-0768 or www.enviroscapesgroup.com
He may be CEO of Faber-Castell USA, with 20 years of experience in the toy industry including stints at Playmobil USA Inc. and LEGO Systems Inc., but he's still a kid at heart
Faber-Castell USA is part of the Faber-Castell family of companies founded in Germany in 1761. Known for its fine writing instruments, wood-cased pencils and art supplies, the company acquired Cleveland-based Creativity for Kids in 1999, then relocated its U.S. headquarters from New Jersey to Cleveland.
Several New Jersey employees moved here to join Creativity for Kids founders Phyllis Brody and Evelyn Greenwald and their Cleveland team. The move joined the Creativity for Kids line with Faber-Castell's reputation for quality art materials.
Brody and Greenwald continue to work on product development, both with Creativity for Kids and Faber-Castell products.
"Their expertise isn't just in developing and evaluating children's products. It's more along the lines of innovation, design and creativity across all types of products," Gallagher says.
Smart Business sat down with Gallagher to discuss the company's growth potential and how it stays relevant in the 21st century.
Faber-Castell produces Creativity for Kids, Play and Learn, Art and Graphic, Graf von Faber-Castell pens, and Design and Porsche Design pens. How has the U.S. division expanded its product line over the past four years?
Taking the entire Faber-Castell line in with us has enabled us to make a larger presence in three markets.
One is the children's art market, through the Play and Learn line. The second market is the young adult or adult art materials market, with the Art and Graphic material line. The third market is the fine writing instrument market. With this line, we're able to enter local pen stores as well as the Office Max/Office Depot-types of chains.
Those (product lines) are manufactured in various places. Some of it comes from here in the U.S., and some of it comes from Brazil, Germany, Malaysia and Indonesia. (In the Cleveland facility), we do some manufacturing of Creativity for Kids sets. It is also our U.S. headquarters for sales, marketing, finance and administration.
The children's arts and crafts market continues to blossom. How does the company plan to grow with it?
Historically, we have focused on the toy industry and toy channels. That is undergoing a tremendous change right now. FAO Schwarz and KB Toys have declared bankruptcy, and Toys "R" Us has closed its Imaginarium stores.
That type of change has driven us to take a serious look at a very interesting and expanding channel of craft and activity stores. Whether it is Jo-Ann Stores or Michael's Stores, that is a very interesting and appropriate growth opportunity for a lot of the products we make.
If you look in the different products within a craft superstore, there are very strong opportunities with us in that market on the children's and young adult side.
We're in what I would call the initial phase of our distribution with the craft superstores. (Hudson-based) Jo-Ann has been a tremendous partner for us, and it's even nicer that it's also a neighbor. We have a very good relationship with them, and I think (there are) some good opportunities with them as well.
Are there any innovations in your product lines that were created in Cleveland?
There's a range of products that has not really been launched yet, so rather than speak about the product, I'll talk about a market segment that we are actively involved in developing.
Our Play and Learn products are high-quality art materials for children who want oil pastels, markers and watercolor pencils. If you walk into any store that sells this type of product, there are a lot of different manufacturers competing in the children's art materials segment.
A lot of crayons, colored pencils and pencils are sold during a back-to-school period. (We've) got modeling dough and glitter dough; we've got a lot of other things that transcend what you would consider back-to-school products.
Where do children go once they leave the age of 8, 9 or 10, yet still express a strong interest in art? We're looking at expanding part of our Art and Graphic line that relates to junior high, high school and college kids who still have a strong interest in art.
This area represents a tremendous opportunity for us because some of the traditional players in this market can't compete or choose not to. It's a bridge for us from the children's market into the young adult and adult market by offering different types of high-quality art materials.
If you look at a segment that we are actively involved in the development of, it's this young artists market. At the moment, we're calling it Creative Studio.
With extensive use of e-mails and faxes, what is Faber-Castell doing to ensure that its writing instruments are an important part of communication in the 21st century?
(We're trying) to make sure our retailers who sell over the Internet or in shops (receive) as much information and training as possible on writing instruments and products so they can confidently sell and communicate the attributes of this product to the people shopping in their stores.
Technology has put a lot of pressure in terms of the writing instruments out there. Despite that, our business has continued to grow. Whether it's our leads, our design or the features within our pens, we have a very specific point of difference.
You will not see us, for instance, competing in the segment of the pen market that sells 12 stick pens for $1; that's not our market. (Our market) is one of a fine writing instrument, which is functional and also a means of self-expression -- 'I use this pen because yes, it writes beautifully, but I also feel it says something about me.'
That segment of the market has probably not eroded as quickly as the more functional-only side of the market.
What's on the drawing board for Faber-Castell USA?
We still believe the young artists market is a strong market that represents growth for us. Another is the craft market for sale of our products through craft distribution channels.
We're also looking at alternative markets for Creativity for Kids-style products that would still be in the area of self-expression but more appropriate for girls 9 to 14 years old, as opposed to 4 to 9. Some people call it a "tween" market ...
Girls 9 to 14 aren't looking for toys. They are looking for other products that represent creative expression.
We launched a product this year called Butterfly Bedroom. It's certainly a craft set, but you can also see where it moves into room décor. (It) takes the Creativity for Kids platform and that creative expression idea and moves into older girls' market. How to reach: Faber-Castell USA, (216) 643-4660 or www.awfaber-castell.com